Engineering Services NAICS 541330

Jul 20, 2025 - Forecast: Sluggish Nonresidential Construction Growth in 2025

• North American construction and engineering spending in 2025 is expected to grow by 1% after increasing an estimated 7% in 2024, according to FMI’s third-quarter 2025 North American Engineering and Construction Outlook. With growth of 32%, the data center sub-sector will lead 2025 nonresidential construction, followed by sewage and waste disposal (7% growth over 2024), amusement and recreation (+6%), water supply (+6%), educational (+4%), and public safety (+4%), power (+3%) and highway and street (+2%). Commercial construction spending is expected to decline 4% in 2025 amid a 4% drop in warehouse demand, which accounts for more than half of annual commercial spending. Lodging construction spending is forecast to fall by 3%, and stubbornly high office vacancies are expected to hold new office construction to 2% growth in 2025.
• The Associated Builders and Contractors (ABC) Construction Backlog Indicator rose 0.3 months to 8.7 months in June 2025 compared to a year earlier. June backlogs were also up 0.3 months from May. The infrastructure backlog increased by 1.1 months in June to 9.3 months over the same month a year earlier. June’s commercial and institutional construction backlog increased 0.4 months to 8.9 months year-over-year, but the heavy industrial backlog fell by 2.8 months to 6.8 months over the same period. The ABC’s Construction Confidence Index for sales rose to 62.8 in June from 60.4 in May. A Confidence Index sales reading of 50 or more indicates most contractors are optimistic about sales. ABC Chief Economist Anirban Basu said, “Despite a wide array of headwinds and disappointing construction spending data in recent months, backlog rebounded to 8.7 months in June, the same level as in April. The durability of contractor backlog is partially due to the ongoing boom in data center construction; 1 in 7 ABC members is currently under contract to perform work on a data center.”

• Firms in the architecture, engineering, and construction (AEC) sector know that generative AI is going to transform their industry, but many struggle with how to adopt AI quickly enough to remain competitive, according to a recent survey by software and AI firm BST Global and reporting by Engineering News-Record. BST partnered with the American Council of Engineering Companies and other industry insiders to conduct the survey. The survey showed that while 82% of respondents expect AI to transform their industry, only 20% said their firm’s readiness was mature or advanced. Most of those surveyed said their AI strategies were in the pilot or exploration stage. More than 90% of respondents ranked “identifying use cases with business value” and “proving business value” as the top challenges for AI implementation. Minimizing risks and proper employee training were key objectives for effective AI adoption.
• At the recent Building Innovation 2025 conference sponsored by the National Institute of Building Sciences (NIBS), construction and civil engineering industry experts addressed strategies for maintaining critical infrastructure in the face of extreme weather events and limited resources, according to Construction Dive. Key challenges include aging infrastructure, including transportation, water utilities, and electricity, that were built using standards that are no longer in use. Federal funding for repairs after climate-related damage typically only pays to restore infrastructure to its previous state, often leaving it just as vulnerable as before. NIBS created the Lifeline Infrastructure Hub in 2024 to build partnerships between federal, state, and local governments, nonprofits, and industry groups to improve communities’ resilience in response to extreme weather events.